Amazon Sued By Feds Over In-App Purchases

Last week, Amazon made it clear to the Federal Trade Commission that it wasn’t going to fork over a ton of cash to close an investigation into the e-tailer’s in-app purchase policy. And today the FTC made it clear that it intends to pursue its complaint against Amazon, suing the company in federal court.

In the complaint [PDF], filed in a U.S. District Court in Seattle, the FTC accuses Amazon of billing parents and other users for millions of dollars in unauthorized in-app charges by children.

The FTC claims that, by allowing children to spend unlimited amounts of money on virtual in-game currency, Amazon violated the FTC Act.

The agency said it has received thousands of complaints from parents about in-app charges made by their kids without permission. It gives the example of a mother who says her daughter was able to rack up $358.42 in unauthorized charges.

In its letter to the FTC last week, Amazon argued that it should not have to face a large settlement, like the $32.5 million one paid by Apple over similar allegations. According to Amazon, it has always offered refunds to customers who complained about purchases made by children.

However, the FTC says that parents who sought refunds had to go through a process that is “unclear and confusing, involving statements that do not explain how to seek refunds for in-app charges or suggest consumers cannot get a refund for these charges.”

The suit seeks a court order requiring refunds to affected consumers and a permanent ban on billing parents and other account holders for in-app charges made without their consent.

“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” said FTC Chairwoman Edith Ramirez. “Even Amazon’s own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents’ consent for in-app purchases.”